Do Developers Still Need Skin In The Game?
Last updated 16/07/2018
Let's take a look and assess whether developers still need "skin in the game" (cash).
For many moons, the majority of equity investors have wanted property developers to put some "skin in the game" into the deal as well as doing all of the work, in order to ensure performance. Whilst logical, does it really ensure the performance of the property developer?
What happens if the developer doesn't perform or passes away half way through?
Those in the know will know that a property development half built is worth far less than what was paid for it so with that in mind, what do you think will happen to an investors equity?
Typically, senior debt will have been used from the outset meaning a bank will hold the first charge. This is likely to be exposed. The bank can sell the development via auction but even then the bank isn't going to get all of its money back. Therefore, this means an equity investor will lose the entire capital invested. We're not so sure developers having "skin in the game" really is the best approach.
How can we help?
When investing in JaeVee's projects, should the property developer not perform or become incapable we're able to step in, take over the project and complete the build. This enables us to protect the bank's first charge, your investment capital and the forecasted profits. We're able to do this because our project team is based on a collective of people and not just the property developer.
Our in-house RICS qualified project managers oversee everything from start to finish monitoring every development on a weekly basis. This assertive approach allows us to assist our property developers throughout ensuring any issues are tackled head on.
We've collectively moved the traditional skin in the game concept from the phone books into the Digital Age. Revolutionising the way people develop and invest in UK property. JaeVee connects property developers with investors by enabling the most profitable property development and buy to let opportunities.
If you're keen to learn more, please visit our investor page.